Malindo Air is a new
low-cost airline in Malaysia. It is a combined enterprise between National
Aerospace and Defence Industries of Malaysia and Lion Air of Indonesia.
Previously, the only low-cost airline in Malaysia was AirAsia. In fact, it is
one of the most successful low-cost airlines in the world. Now,
after a decade as the only low-cost airline in Malaysia; Malindo Air has
stepped in to be their first ever competitor. AirAsia is still a first choice
to the people because they offer many destinations around the world compare to
the new Malindo Air which offer flights only in Malaysia and India.
No More Monopoly. It’s Oligopoly Now
Oligopoly
is applied in these two massive companies. Oligopoly is much like a monopoly;
it is a market structure in which few firms dominate like Air Asia and Malindo
Air. These two firms have one thing in
common where the behaviour of Air Asia depends on the behaviour of Malindo Air
in the industry-strategic interdependence.Both of these large firms are
competing with each other and each of them is a price maker. Air Asia has to
consider how Malindo Air will react to any modification in their price. Malindo
has launched tickets worth RM69 to 89 for air travellers that wishes to go back
to their hometown. However, Air Asia remains cool and unfazed by Malindo’s
aggressive expansion. They reacted to it quickly and have set up a price of
RM29 to all domestic destination for a short period of time. Nonetheless, this
is a strategic move by Malindo to implement the low-cost airline idea, as it is
obvious that Air Asia has dominated in this aspect for a long time.
Air
Asia is not really concerned about the competition posed by their competitors
because they are still far away in terms of economic status. Air Asia will most
probably still dominate the skies as the best low-cost airline in the world for
another 5 years. As said by their chief executive Aireen Omar "We have actually reported growth consistency in
terms of network expansion and financial reporting, in line with the
whole AirAsia group’s growth prospects". But they are
certainly welcoming Malindo as their fresh competitor so that they can improve
their business, “Obviously,
we will always monitor the competition. We welcome it because it will make us
better and sharper as to what we want to do" said Aireen. Malindo is set to kick-start
its international flights by flying to India later this year to compete with
AirAsia’s international routes although there are still much more to catch up.
It will take a huge amount of time for Malindo to compete at the same level.
AirAsia
and Malindo Air will work hard and keep competing with each other to improve.
They will monitor each other’s plans and decide how to react to it. This is a
good way to attract more air travellers to board low-cost airlines.
For
more information, you can refer to the links given below:
Written
by
Megat
Shazwan Aqif, 0315429
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